Critical Care: Healing Healthcare With Real-Time Payments
Timely payments remain elusive for most healthcare providers, with organizations waiting weeks or months for patient payments. While many providers offer flexible payment options and plans to their patients, such as 30-day or 90-day terms, the average small healthcare provider still receives 25% of its payments late. These delays can lead to critical downstream cash flow issues, jeopardizing firms’ ability to pay their own bills or meet payroll.
The remedy to this payment pain lies in real-time payments. Implementing real-time rails can help alleviate the challenges facing healthcare providers, enabling them to facilitate the timely and efficient allocation of funds. An increasing number of companies are recognizing this solution. According to a recent PYMNTS Intelligence study, 83% of small healthcare businesses used real-time rails to send or receive payments last year, with roughly 8 in 10 of those organizations reporting high levels of satisfaction.
- Late Payments Compromise the Health of Healthcare Operations
- Real-Time Payment Remedies for Healthcare
- Obstacles to Real-Time Payments Occupy Healthcare’s Road to Recovery
- Treatment Plan: Improving Outcomes With Real-Time Payments
Late Payments Compromise the Health of Healthcare Operations
Late payments significantly strain healthcare providers’ balance sheets, complicate cash flow management and require increased attention from accounts receivable teams.
For 75% of healthcare providers, receiving payments instantly can prevent complications.
A PYMNTS Intelligence survey shows that late payments can create friction related to tracking payments and managing cash flow, which can lead to downstream issues such as difficulty paying vendors and staff. Healthcare providers that did not utilize real-time payments were more likely to report unhealthy balance sheets, a significant concern for smaller healthcare providers that often operate on tighter budgets and have fewer resources to manage disruptions.
75%
of healthcare providers say not receiving payments instantly can create downstream complications.
Hospitals have been hit with a surge in late payments.
A recent report found that hospitals and health systems across the United States experienced a wave of late payments in Q1 2024, resulting in revenue shortfalls of up to 18%. The rise in delays was exacerbated by a large-scale cyberattack on Change Healthcare, one of the world’s largest healthcare payment processors, in late February, causing widespread disruptions throughout the U.S. The reality that a single incident can contribute to significant revenue losses underscores the daily missed revenue opportunities stemming from manual payment processes, posing significant challenges for healthcare providers that have yet to adopt instant payments.
Real-Time Payment Remedies for Healthcare
Real-time payments can limit the impact of late payments by eliminating long processing times. This reduction in delays can generate significant benefits for healthcare firms, such as improved cash flow and enhanced accounting accuracy.
Speed and convenience top the list of benefits for small healthcare providers.
61%
of SMB healthcare providers that sent real-time payments cited speed as an important benefit.
According to a recent PYMNTS Intelligence survey, 61% of small to mid-sized businesses (SMBs) in the healthcare provider segment that sent real-time payments cited speed as an important benefit, as did 57% of those receiving real-time payments. Among senders and receivers, 28% and 27%, respectively, cited speed as the most important benefit. For payers, ease and convenience ranked as the second-most important advantage, while for payees, the runner-up was risk management. Additionally, both groups identified better cash flow management and low cost as key benefits.
Small healthcare providers are adopting real-time payments in record numbers.
The PYMNTS Intelligence study also found that 64% of healthcare provider SMBs are very or extremely interested in sending real-time payments in the next year, while 68% are highly interested in receiving them. Moreover, of the healthcare provider SMBs that sent payments via real-time rails, 81% reported that they were very or extremely satisfied with their experiences. This satisfaction rate rises to 91% among larger SMBs generating $1 million to $10 million in annual revenue.
Obstacles to Real-Time Payments Occupy Healthcare’s Road to Recovery
Despite the recent rise in instant payments adoption, many healthcare providers continue to rely on legacy payment systems, primarily due to fear of fraud and customers’ reluctance to adopt new payment methods.
17% of SMB providers do not utilize real-time rails.
Concerns about fraud and limited consumer adoption contribute to this trend. According to the PYMNTS Intelligence report, worries about a heightened risk of fraud deter some SMB healthcare providers from sending real-time payments, with 31% of those that opted not to use them in the last year citing this as a primary concern. Meanwhile, among the healthcare providers that did not receive real-time payments in the last year, 26% identified limited customer adoption as their primary reason, while another 39% considered it among the main factors. Other key factors causing healthcare firms to eschew real-time payments — both as payers and receivers — include cost, lack of real-time payment support from banks and difficulty of use, which ranks second among those that did not send instant payments.
31%
of SMB healthcare providers that sent no real-time payments in the last year cited risk of fraud as a main concern.
Interestingly, the study emphasized that perception, rather than reality, shaped these responses. For example, businesses citing difficulty of use or cost as key considerations for not using real-time rails may lack awareness that these payments are both user-friendly and cost-effective.
Oracle Health has struggled to update the payment systems of a recently acquired company.
Oracle Health’s plan to modernize the payment systems of its recent acquisition in healthcare medical records, Cerner, has encountered a few setbacks due to an underestimation of the effort needed to upgrade these systems. Oracle Health has since refocused its efforts on migrating Cerner clients to its cloud infrastructure, which will facilitate easier software updates and data sharing.
This follows a broader industry trend, with Apple, Amazon and Alphabet also confronting obstacles in their attempts to modernize healthcare technology. Given the complexity and regulatory landscape surrounding healthcare, these companies have been forced to scale back their ambitions.
Treatment Plan: Improving Outcomes With Real-Time Payments
The healthcare industry is experiencing significant demand for faster payment options, fueled by the imperative for improved efficiency, patient satisfaction and financial stability. Patients increasingly expect the same level of convenience they enjoy in other aspects of their digital lives, mirroring their experiences in sectors such as retail and eCommerce. As a result, healthcare providers are deploying strategies to meet this demand.
Implementing faster payment options provides numerous advantages for healthcare providers. Expedited payment processing ensures that providers receive funds promptly, bolstering their cash flow and financial stability. This is critical for sustaining operations and investing in new technologies and services. Furthermore, offering convenient payment options enhances the overall patient experience, as satisfied patients are more likely to return for future services and recommend their providers to others. Meanwhile, within healthcare firms, streamlined payment processes reduce administrative burdens on staff, allowing them to prioritize patient care over financial transactions. Moreover, faster payments reduce outstanding accounts receivable, thereby minimizing the risk of unpaid bills or the need for costly collection efforts.
The demand for faster payment options in the healthcare industry is reshaping how providers manage financial transactions. By adopting digital payment platforms, real-time processing, patient portals and automated systems, healthcare providers can optimize cash flow, elevate patient satisfaction and enhance operational efficiency. However, they must also navigate challenges related to systems integration, data security, patient adoption and implementation costs to fully reap the benefits of these advancements.
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